Elevating Advisor-Client Relationships: Asset Bucketing Sparks Dynamic Goals-Based Conversations

To build a successful financial advisory firm, you need to home in on what makes you unique.

It’s kind of like your great-grandmother’s secret stew recipe. What makes her stew better than any other you’ve tasted?

Part of it is the secret ingredients. Perfected over decades, her recipe has a unique blend of spices or a singular technique that enhances the flavor. But the other part is the personal connection — when you make her stew, you commune with your ancestors who’ve passed the recipe down across generations.

You can apply the same concept to finding your financial advisory firm’s differentiator. All firms have the same basic ingredients: advisors that use technology to devise a strategy, invest, and monitor progress with data. But how you combine those essentials matters; when you incorporate goal-based investing into your recipe, you can create an exceptional client experience.

Goal-based asset allocation is not only the unique twist on your financial advisory recipe; it’s also how you can connect with clients across generations. You’re helping them build a financial strategy that sets them up for a brighter future and provides for the next generation.

Let’s look at goal-based asset allocation and how this behavioral finance technique can be the secret ingredient that serves your clients and your firm.
 

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How Goal-Based Asset Allocation Delivers for Your Clients

Personalization is a key driver of client satisfaction in wealth management. Investors want to feel they’re receiving attentive service that considers their unique needs, goals, and concerns.

Goal-based investing strategies place your client’s big vision at the center of everything you do — it’s hard for clients not to feel they’re getting personalized attention in this scenario!

When you begin your planning process with goal-based investing in mind, you deliver several crucial client benefits:

• Your clients learn when to stay the course and when to switch it up. While advisors know the benefits of focusing on the long term and riding out momentary peaks and valleys, this wisdom isn’t always intuitive for clients. Goal-based asset allocation can help reduce knee-jerk reactions to external events and keep them focused on their goals. Surveys show that 43% of advisors¹ were able to keep clients invested during periods of volatility by incorporating behavioral finance techniques.
• Your clients feel more in control. When goal-based asset allocation drives decisions, your clients aren’t unthinkingly following cookie-cutter advice. Instead, they are confident your recommendations are explicitly built to serve their larger goals. This sense of participation in the process strengthens their sense of agency and makes them more inclined to stay the course and contribute to your work together.
• Your clients feel safe working with your team. This sense of control and confidence in the process makes investors like and trust your team. When they trust you, they’re more likely to be honest about their financial needs, wants, and limitations, which further empowers you to build a truly personalized plan. And as you react appropriately to changes, concerns, or questions, you further solidify your client’s trust. It becomes a virtuous cycle that fuels long-term growth.
• Your clients see better long-term performance. Research has found that investors who work with traditional brokers see better results than those who use online traders; they’re less likely to make speculative, unnecessary trades. As an advisor who incorporates goal-based asset allocation, you add another stabilizing dimension to the relationship. When investors can see the connection between their current holdings and long-term goals, there’s an even greater incentive to stick to the plan.
• Your clients measure success differently. Similarly, focusing investors on their goals results in a mindset shift. They’re no longer concerned with chasing the latest fad stock or beating the market. Instead, conversations become about longer time horizons and hitting meaningful, personal milestones — something far more fulfilling than aiming for arbitrary numbers on a spreadsheet.

These benefits unite to keep investors in the market for the long haul. Goal-based asset allocation and investment strategies keep clients focused on the big picture, reducing the risk of impulsive decision-making that ultimately undermines overarching goals.

How Goal-Based Asset Allocation Serves Your Firm

The best part about goal-based asset allocation is that it doesn’t just enable exemplary client service. There are positive effects for your advisors and firm, too.

Here are some of the ways your colleagues and business benefit from goal-based investing strategies:

• You can offer better financial plans. Accurate, nuanced planning requires a complete, detailed picture of each client’s situation. Goal-based investing helps you capture more of the “why” behind your client’s stated desires. Everyone wants to make money over the long term; when you understand the core emotional drivers fueling a person’s desire to invest, you can deliver recommendations tailored to those specifics.
• You strengthen your emotional connection with clients. Neuroscientists have found that when you listen to someone tell a story, your brainwaves sync up with theirs. Hearing your client’s narrative and investing in their hopes and dreams establishes a profound connection. You’re no longer just a service provider — you become a true partner. They’ve plotted out the future they envision, and you’re committed to working together to make it happen.
• You enjoy long-term relationships with clients. In a survey of business leaders in the consumer space, 62% reported better customer retention² through the use of personalization tactics. When individuals feel cared for and heard by the person they’re doing business with, they’re likelier to stick around.
• You drive client referrals and advocacy. Seventy-one percent of clients who identify as emotionally connected to a business rate it highly compared to only 45% of clients who identify as satisfied.³ Establishing that deeper connection with your clients can play a crucial role in driving client advocacy and generating positive word of mouth for your firm.

Goal-based asset allocation helps your firm on the micro and macro levels. You strengthen each client-advisor relationship, fostering client retention and advocacy, which powers long-term growth.

It’s hard to find a downside to goal-based investing strategies. Clients and advisors get a deeper understanding of goals and objectives, which helps them define a more precise roadmap to achieving them. This contributes to better financial outcomes that ultimately enrich clients' lives beyond the numbers on a balance sheet.
 

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2570-OAT-9/14/2023

¹Source: “BeFi Week 2021”, content.investmentsandwealth.org, 2021

²Source: “The State of Personalization Report 2023”, segment.com, 2023

³Source: “Motista’s Study Results Conclude That Emotional Connection Is the Key to Brand Success”, martechseries.com, 2018